A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Author: Mark Fletcher

Questions for newsagents from uni students

I have been interviewed by four uni students in this week for papers each is preparing for assessment. Two are writing papers for business studies, one for journalism and one for media studies.

In each case they were interested in where our channel sits in this period of disruption to print media. They came at the questions from the perspective of a print is dead world.

We talked about the habit based shopper for newspapers, their typical age and what else they buy. We also talked about regular magazine shoppers, =especially special interest title shoppers. They had not considered looking nat magazines beyond titled in the top ten.

Two students were shocked that some newsagents are growing their businesses outside of print media products, that some have been doing this for years.

The journalism student was really interesting to talk with because we discussed what constitutes journalism today and explored how local businesses, like newsagencies, might play a role in that evolving world.

One business student had not considered newsagency businesses trading outside their traditional shingle. The discussion led them to reconsider the position they were taking in their paper, that our channel would become extinct.

What I liked most about the discussions was the two-way discussion. They challenged me and I challenged them. I learnt plenty about a valuable demographic as these students will graduate, they will, hopefully, get jobs and they could become our customers.

I was surprised to learn that all four thought of our businesses as newsagencies =would have been in the 1990s. None could remember visiting a newsagency business that they would consider purchasing from beyond lottery, magazine, newspaper and some stationery products. None could name a newsagency they’d visit for gifts.

We newsagents have to change this. We have to preach loud and long about our relevance today, about our pitch away from what has been traditional for the channel. Those who are growing are growing in these new and fringe product category areas.

No one else will make this we are relevant today pitch for us. We have to do it relentlessly, entertainingly and with a voice that is relevant. Were need to do this so uni students don’t look at our channel only as one that is in a death roll.

I say this because each of the uni students I spoke with is open to a newsagency channel that is relevant to them, even if only a few times a year.

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Newsagency management

Leveraging Peppa Pig for the newsagency

Peppa Pig is one of the top licences in Australia with 200,000 searches a month. What’s terrific is that newsagents can access plenty of Peppa Pig products from greeting cards to stationery to toys to plush. The thing is, however, you need to display Peppa Pig products together to tell a strong and noticeable Peppa Pig story. Do that and you are more likely to more items in the basket and thereby maximise margin dollars from the purchase.

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Basket building

Smart placement of puzzles and pens

Check out this placement of a small format puzzle book and pens at a news outlet at Sydney airport. This is situated with fashion titles, close to the front. Where retail space is expensive, it pays to be smart and maximise every shopping visit opportunity.

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crosswords

Growth in higher price-point toy revenue in Australia

Good news: Independent industry driven analysis of toy purchases at retail in Australia in the last financial year reveals significant growth in $10+ product purchase points.

All price point bands above $10 show growth in the research results. Even at the $50+ point, which accounts for 25% of revenue, we see 3% year on year growth.

Elsewhere in the report is evidence that the toys category is strong. I see this also in the benchmark data I access and from my own stores at a local business level.

What is most interesting is the insights as to licence and key brand opportunities. With toys being a fickle category and prone to quick growth and quick decline, having good data can be key to driving success.

I think any newsagency in any location could offer a consistent toy range and use this to attract new shoppers to the business.

While I am still working on a benchmark ratio, I am leaning toward to suggesting a reasonable goal could be toy revenue equal to at least 50% of card revenue While I know stores significantly above this, most the of the newsagency channel is below so I think a modest benchmark revenue goal is more useful at this time.  In considering this, toys means toys plus puzzles, plush and collectibles as that is how the analysts assess it.

And to be clear, the toys I am talking about here are those from major suppliers, not cheap generic brand toys you might put on a spinner on consignment.

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Newsagency opportunities

Why banks will not lend against newsagency businesses

Years ago, people purchasing a newsagency business could borrow against the value of the business without supporting brick and mortar property. It was considered a bankable asset.

That changes with deregulation in 1999. While people could still borrow against a newsagency business without other security, they could not borrow to the same level.

Today, the banks will not lend against a newsagency business. rather, they lend against property and permit those finds to be used to purchase and run a newsagency business.

The banks consider the business itself to not be an asset. The same is true for most independent retail businesses.

Talking to a banker last week at a business conference, they said their risk assessment people saw the increase in independent retail business collapses as a key reason. The situation of today is, in part, due to the collapse of others, their business failure has made it hard for those in business today.

There are lenders of last resort who will lend without the property asset. however, they do so at a cost and risk that is, in my opinion, not worth it. The banks have hurdles for good reason. I encourage anyone buying a retail business to be happy with them, to accept them and not seek to go around them.

The decision of the banks is not isolated to our channel. Further, it does not mean newsagency businesses are not a good investment. rather, the decision reflects on the nature of independent retail and the position of the banks towards risk assessment today. It reflects their natural conservatism and that money is their prime product.

Buying a business is like buying a house. You need the appropriate amount of capital before you can begin. The right amount of capital needs to also include funds for contingencies, costs you have not expected. Plus, it needs to reflect factors outside your control, which we see more in retail today.

Even with property backing a loan, banks will look automatically at a small retail business as an asset in itself. This is why the business needs to be prepared, to look like a good investment, to look like it will succeed. It supports the case to the bank.

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Newsagency management

In my opinion, the Mark Knight cartoon published in the Herald Sun is racist

I am disappointed News Corp. management permitted the publishing of the Mark Knight cartoon of Serena Williams in the Herald Sun today. What I see is a racist cartoon that panders to a racist agenda News Corp tabloids favour.

The cartoon is not funny.

Knight has been out in the media today defending the cartoon. If the cartoon was abut a hissy fit then he could have made it about that. Instead, he made this race-hate piece.

While we newsagents are not censors, I am not happy selling a newspaper with this in to. However, I take comfort that I am not in Sydney and having to sell the Daily Telegraph, which is more trashy more often.

Did we take the Herald Sun off the shelves? No. As I noted, we are not censors. Knight has a right to create a racist cartoon and News Corp. has a right to publish these. The best thing we can do is not buy the product.

The executive chairman of News Corp. has entered the discussion:

Ebony magazine makes a good contribution:

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Ethics

Missing Ansett Airlines

Seventeen years ago, Ansett Airlines was grounded, never to fly again.

I miss Ansett, it was an terrific airline. I also miss it it because it was the underdog, the I think I can commercial competitor to the government owned airline. It fit well with me in a small business sense.

What I really miss abut Ansett when I travel is the service. There was something about it that was unique, something one does not see today from airlines. I got the impression they knew that service was a key differentiator for them.

While businesses often say that their service is a differentiator, the customer experience does not so often reflect this. For me, the Ansett experience was actions speaking louder than words.

I am in a couple of frequent flyer forums where Ansett comes up from time to time. People often speak in glowing terms of the company and their experiences with it.

That Ansett is talked of in such glowing terms today, seventeen years on, demonstrates that their service pitch was on-point, that they got it right. Many of us in business would wish the same good memories for our own businesses.

Getting customer service right is hard, especially today in the era of instant outrage, which is aided and abetted by the megaphone of social media. Because of this world, the bar is higher than ever and accountability more public than ever before.

While it is nice to look back nostalgically at Ansett, and years for those times, today is today and we in business must run our businesses for today’s situation. We have to operate knowing that even the smallest mistake can blow up and reach thousands in seconds. We have to focus delivering honest, engaged and valuable customer service We have to do this in a way that differentiate titans us from competitors on our street, in malls and online.

I get some motivation from Ansett stories in forums today when I read them because they remind me of a customer service experience I truly appreciated, an experience that differentiated the Ansett product from its competitor and, for me, that is at the heart of business competition.

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Competition

A dividend from Bill Express liquidation?

We, like many longer-term newsagents I suspect, received a notice from Pricewaterhouse Coopers, the Liquidators for the failed Bill Express business, announcing an intention to declare a dividend on or around 21 September 2018.

Newsagents wishing to participate in the dividend will need to complete a proof of debt claim and provide documentation by September 19, 2018. This requirement is regardless of p-reviously provided claims as I understand it.

If you are not aware of the Bill Express saga and the cost it imposed on our channel, read the 200+ posts here about it.

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Bill Express

Squishies attract shoppers to the newsagency

We are loving squishy sales. We have now re-stocked five times and there is no slowing up. Being in a high-traffic shopping centre helps as does having the colourful range on the lease line as well as the certificates showing the health and safety checks undertaken by the factory supplying the product.

Attracting new traffic is a challenge for any shop. Squishies is a category that is working for us. The shopper often shops beyond this category.

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Newsagency opportunities

Ignore Harry Potter products at your loss

A newsagent last week said to me people in my area don’t like Harry Potter. They said this when I asked why they had no Harry Potter product in their store. I tried it once and it failed, they said.

By trying it, they put in a small display of five different products in what I’d say is a less than ideal location in-store. They managed their own failure, I suspect to serve their opinion that Harry Potter products would not work.

The facts are that there are more than 350,000 separate Google searches in Australia each month for Harry Potter products, information, data. I have looked at he search data by location. The area where the newsagent to whom I refer is located is as interested in Harry Potter as the rest of the country. indeed, a major retailer nearby has a good Harry Potter offering in-store.

Too often I see independent retailers manage for failure by allowing personal preferences to dictate what can and can’t work for them.

The truth is, we never know for sure what will work in our shops and what will not work. The only way to find out is to have a crack, a big, bold, well-located, strongly supported crack and to promote this outside the shop as well as inside and to do all this as if we believe in the range 100%. In other words, we have to be all-in.

If we are not all-in, if we are half-assed, we manage to our expectation (hope?), we manage to failure and while this may suit our internal narrative, it fails our  business and those it feeds.

There is no point t in dabbling, trying small bets of this and that.l we are better off having less numbers of  ranges and going deeper into each range, committed and demonstrating the we serve those interested.

This is how it is with Harry Potter. Speaking from my own experience, a solid display with a broad rage of products in a good location achieves an average basket depth of four and a half items from the range. This is an excellent result. Four is above average basket depth for most gift shops, toy shops and newsagencies.

Once a Harry Potter fan or someone shopping for a Harry Potter fan sees the range and if the range is broader than they have seen elsewhere, they stock up and you benefit.

This post is NOT about Harry Potter. It is about…

  • Being open to what can work commercially regardless of personal interest or taste.
  • Wholeheartedly supporting product so they can find their success level.
  • Understanding that less can be more.
  • Data matters.
  • Headline licences being key to new traffic.

For sure, there will be stores where Harry Potter does not work, for a variety of reasons. However, the licence will work in far more than currently think it will work.

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Newsagency opportunities

My newsagency circa late 1996

This photo is of the second location for my first newsagency at Forest Hill in Victoria. I bought the business in February 1996. The landlord required us to move a few months later. This photo is of the new location. It reflects the focus back then on the newsagency shingle as well as on newspapers being used to attract shoppers.

The shop retail floorspace allocation was traditional for the time: a third for papers and magazines, a third for stationery and a third for cards.

We traded from this location for three years before being moved in 1999 up a level to a new locations where we added Tatts to the business. In 2006 we sold the home delivery run, for the price I paid for the original whole business, and six years later sold the whole business.

Even though it has only been twenty two years since I bought into a retail business in the channel, the extent of change has been dramatic. The speed of change is faster now than in the first fifteen or so years.

It’s good to look back and to reflect from a hindsight perspective.

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newsagency of the future

TV’s Greatest Reunions from Who is a hit

It’s good to have a popular magazine issue to promote on social media. TV’s Greatest Reunions from Pacific Magazines is one such title.

From the Who stable, this one-shot is popular. People are tagging friends on social media and talking about the cover shots in a positive way. People who grew up in the 90’s are particularly engaged.

In my experience, placed at the counter TV’s Greatest Reunions is also being purchased on impulse, which is terrific for any magazine.

We have had people coming i and asking the title based on reading about it on social media. These are all wins in my view. We are maximising the opportunity.

Now, to get usual responses out of the way: 25% GP is awful; the magazine supply model is broken; counter space is better used for higher margin product etc. etc.

The thing is, this is a nice impulse purchase title that appeals to a demographic we connect with through a range of gifts as well as cards. It fits in a basked packed with value and good margin. This is where I see it working well, for us.

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magazines

Lottoland going nowhere, building their database

On TV the other night Lottoland claimed 700,000 Australian customers. Their pitches have not slowed since parliament set a date for their closure in Australia. Emails like this one in the image show clever campaigning on their part to get punters to part with their cash.

I wonder if the marketing is all part of a plan to remain connected with these shoppers long after the sunset of their traditional Australian offering becomes illegal. Nothing else makes sense.

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Competition

Sheesh … Officeworks is expensive

I was in Sydney Wednesday and needed small kraft bag. $2.18 is what Officeworks in Pitt Street wanted for a bag that I suspect would have cost them between 15 cents and 40 cents depending on the volume they purchased.

I made other arrangements. $2.18 is way overpriced for a small think kraft bag. Thinking as a shopper, it reminded me that Officeworks is expensive.

The challenge for newsagents who compete with Officeworks is how to make the price pitch. I think sharing shock price comparisons could be useful, especially in regional situations.

If there genuinely is a big price difference where Officeworks is far more expensive, share it. Stick to the facts. Compare like for like.

If, in comparison, you find Officeworks cheaper, think about how you respond in your business. Approach it as an opportunity.

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Competition

The other type of wage theft that hurts small business owners and work colleagues

While there are plenty of reports at the moment about wage theft by businesses, there is rarely reporting about the other wage theft, the theft of paid hours from a business by employees.

The stories or wage theft and related matters about 7-Eleven, high-profile restaurant corporations, Lush and other businesses are awful. Any business engaged in such activity ought be prosecuted.

However, when it comes to the other wage theft, the theft of paid hours from a business by employees, there is not much employers can do. The sickie is a national tradition, something that is joked about alone some employees.

In full time work, it is common to have ten personal days a year. These used to be called sick leave. Now, they are personal days and the opportunity for regulation by businesses is limited. While we employers can have some rules around medical certificates, the opportunities are limited.

There are some employees who take their full allotment every year, some with extraordinary regularity. If they are doing this without being ill or having a genuine reason for use of the personal day, it is wage theft from the business.

While this type of wage theft from a business by employees is rare, in small businesses especially it is noticed and has a high cost. It is noticed by colleagues and by the business owners. Indeed, it can be a reason a workplace adjusts its employee model from full-time to more casual employment.

Personal leave is there for legitimate reasons. Taking it for an extra day off uses a day that may be needed down the track for a genuine reason.

As an employer, I think the best hope for resolving paid hours theft from a business by a full time employee  is peer pressure … pressure from colleagues on those who are abusing personal leave, pressure on them to use personal leave legitimately, to stop stealing paid hours from the business. I say this because work colleagues are usually the ones who have to cover workload, they are also bearing a cost from an employee taking a day off because they are hung over, want to stand in line to buy something or are too lazy to work that day.

In my years owning a business, the percentage of employees stealing paid hours is very small. However, in small business it is noticed. A $250.00 for a day off can cost $500.00 and more in sales to make up. Thinking about that and thinking about how we would handle a customer stealing $500.00 worth of items in a day can bring the issue into focus.

In reality, employers may complain about it but, usually, they (we) sit and watch it happen, because there really is little we can do and because the vast majority of the team do not abuse personal leave, for which we are grateful.

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Ethics

Coles spends big telling Aussies it does good

Maybe rather than spending big telling people how good it is at helping Aussie farmers, Coles should actually pay farmers fairly for their produce.

There are plenty of reports of farmers – dairy, cattle, vegetable, fruit – being paid less than a living wage for their produce under pressure from supermarkets like Coles.

Donation matching is good. Paying a fair (for farmers) price is even better.

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Social responsibility

Nextmedia taking over Frankie magazine

Frankie has a new owner, again. This announcement, yesterday, from Mediaweek:

Magazine marketplace: nextmedia buys Frankie, sells tech titles

Pacific Star Network yesterday announced an agreement to sell the business of Morrison Media Services to nextmedia. The Morrison titles formed part of the company’s publishing division, which was responsible for non-sport related publications including Frankie magazine and Smith Journal.

Pacific Star said the sale follows a strategic review of the company’s publishing assets and related opportunities.

The total sale consideration is $2.4 million cash less working capital adjustments. The amount is payable 70% on settlement and 30% on June 30, 2019. The sale represents a multiple of approximately 3.2x FY18 EBITDA.

nextmedia will acquire Morrison’s business assets. Hamish Bayliss, the recently appointed managing director of nextmedia, commented: “We are delighted to add two premium brands to our portfolio and further cement nextmedia’s position as the leader in specialist publishing.”

Craig Hutchison, managing director of Pacific Star, said: “Since announcing the merger with Crocmedia in January 2018, we have undertaken numerous operational and financial initiatives. The sale of Morrison aligns with the continued expansion of our ‘Whole of Sport’ offering. Publishing remains core to our ‘Whole of Sport’ offering. Our recent acquisition of the AFL Publishing business, responsible for the iconic AFL Record publication, complements our broader suite of sporting assets.

“We continue to assess other opportunities to expand our ‘Whole of Sport’ offering and complement our live sports agenda and commercial radio broadcasting rights.”

Settlement and completion of the sale are subject to customary conditions precedent being satisfied, expected to occur by mid-September 2018.

The announcement coincided with the publication yesterday of a special food edition of Frankie magazine.

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magazines

The Kylie Jenner Vogue is still available

At Melbourne airport yesterday I saw 4 copies of the Kylie Jenner Vogue Australia issue available in one shop.

Tech savvy magazine publishers and distributors would know exactly which shops have stock and would leverage this information to drive in-store traffic.

Instead, we have a low-tech approach to magazine distribution that serves only the publishers and to the retailers and consumers.

While it is not often we see magazines like this one that ‘sell out’ within 24 hours. there is benefit in a smart tech solution to help retailers and consumers find titles. This approach would ens=courage newsagents as to the value of the category.

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Leadership
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